Eve Light

Absolutely! I've explained the same things over and over and over again, with screenshots, with examples, in very slow and short sentences... It drives you nuts. But we're talking about thousands of $/€ or possibly even punishments for tax evasion, so it's really important that we get to the ground of this.

Hi Finite, this is not about income tax (I've been paying that for years already), but about VAT, which is an additional tax, that EU residents are being charged. For those of you, who are looking for information on how to handle VAT - here is an interesting thread in another forum with a lot of information, but it's in German: https://www.slinfo.de/threads/umsatzsteuer-auf-verkäufe-von-objekten-bzw-l-transaktionen.44446/ Currently it looks like we have to pay (and theoretically charge our customers) additional VAT. There have been court proceedings in Germany in 2019 and the result was that L$ are considered to have a real value and therefore we would have to pay VAT on transactions between residents - in contrary to what most people believe and what LL state on their website. But there are currently proceedings on appeal on questions of law on this decision and we should have a final answer in 2021.

Thank you, that's a good hint. I googled it in German and it seems like if I sell the royalties to a US company (if LL is my "payment debtor"), there will be no VAT charged, because they are a company and clearly based outside of the EU. But if the "payment debtors" would be users, I would have to pay (and charge) VAT, because the "downloads" are anonymous and the user could be in the EU. I'd say LL is my "payment debtor", but why did the tax accountants struggle with this - although I showed them my Tilia receipts and the money on my bank account clearly came from Tilia/Linden Lab, which clearly is a company?

Your'e right and I already kind of tried that. Due to covid it wasn't a personal meeting though, but I sent a long letter in which I explained precisely what I do and the way the money goes from L$ to €. All they sent back was a letter that said "Please find out how VAT is applied and do the sales tax return" 😄

If I charged VAT is one question, but if I have to pay it is another. I couldn't charge VAT, because my products would be much more expensive than my competitor's - but I could return VAT as some kind of discount, if US customers or those who run businesses would reveal their identities...theoretically lol Nah, sounds like a crazy idea. But it might be, that I simply have to pay VAT, regardless of being able to charge it..?

I know. But I can't have an income of over 17.500€ without charging/paying VAT on it - unless my business partner is a foreign, non-EU company. But LL clearly state in the TOS, that we are not working for them. I think my former tax accountants see it as a form of platform economy - similar to selling stuff on Ebay - and I guess LL sees it the same way, right? Oh and is it possible, that "There is no VAT for Resident <-> Resident transactions." just means that LL is not taking care of those taxes for us, but maybe we still have to charge/pay VAT on L$ transactions?

As I said I've been discussing this with 3 different tax accountants already and paid them way more than my yearly income tax. They do not know how to do it. I usually pay their research, which usually results in no clear answer. The last thing they said is I would have to track each L$ transaction, calculate what the L$ would be worth in the moment I receive them from my customers and charge/pay VAT on it. I believe that this is kind of impossible to do, so I thought I ask here. Is there nobody who has run into the same issue? Could it really be that I am the first European merchant who is struggeling with VAT? I'd also be super happy if anyone could recommend a tax accountant!

Right. But how do I declare the money I‘ve cashed out? Do I say it‘s non-taxable money I‘ve received from a US based company? Because if I say that it‘s from art sales (which I did in my income tax returns), I‘d clearly have to pay VAT on it.

Exactly! But the problem is they want me to do a sales tax return - so how do I declare this?

Cool, thanks for the link, I'll read into that! So it means you paid VAT on what you cashed out? (at least before Brexit...) And did you do the calculation based on Tilia receipts? Wouldn't that be a transaction between a US company (LL) and you, which would simply mean you wouldn't have to pay the VAT at all? I've been paying income taxes for years already, but now I crossed a limit (17.500€) and seemingly would have to pay VAT as well. As I understand it, I'd have to take VAT from my European customers and forward it to the tax department, but since we can't know who is European or who has a business and so on, they just want us to pay VAT on everything, even without proper receipts? Sorry for the confusion, but this is all crazy...

Hi everybody, I hope you can help me on this one. I've been a creator on SL for quite some years now and it looks like I'm getting into trouble with my tax department (I'm living in Germany). They asked me to declare VAT and reach in a sales tax return. As far as I understood, there is no VAT on transactions between residents http://wiki.secondlife.com/wiki/Value_Added_Tax , so I never really worried about it. But after weeks of research and paying 3(!) absolutely clueless tax accountants for even more research, it doesn't seem so easy. So my questions are: Does anyone of you European or - even better - German merchants pay VAT for sales in L$? And if so, how do you declare it? Since VAT would apply to each sale, I'd have to pay the VAT not only on my final income (the amount I withdraw), but also on all the money I spend for advertising, hiring people for customer support, modeling for vendor pics, and so on, ...right? And how do you calculate the value of each L$? What do you use as receipts? OR: If LL would be right and there's simply no VAT to pay on L$ transactions, what do I write into the sales tax return? Could I say my business partner is LL, a US based company, since the only transactions in "real" money are the transactions between LL and me? Thank you so much in advance!